bear market portfolio strategy?

Question

does anyone have ideas or websites that will provide info on bear market portfolio strategies?

Answer 1

QID or SDS are the easiest way to go.

BUT: you have to be careful - people like to put things into categories and stick with them. There is a difference between a downtrend, a correction, and a bear market. If you position yourself based on an assumption, and the trend changes, you will be too slow to recognize that and act, which may hurt you financially.

Answer 2

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It’s absolutely true that penny stock investors can make very quick gains. Synutra International, Inc. (NASDAQ: SYUT) is a great example of a penny stock. This dairy-based, nutritional-products company has jumped from a little Bulletin Board operation to a billion dollar corporation. The company finally graduated from Over-the-Counter status to the NASDAQ Stock Market bringing with it 113% gains in less than two months.

This happens all the time and it’s how some of the best investors in the world became the richest investors in the world. Buying some shares for pennies on the dollar and selling at $10 or $20 is possibly the fastest way from being a hobby investor to a super investor

Answer 3

If your time horizon is long (> 10 years), and a bear market hits, you should then invest heavily in stocks. The worse the market is doing, the more stocks you should buy. For example, someone starting in 2002, when the market was in the thick of the crash, I would have actually recommended a brand new investor (who had a long time horizon) pick a 90% stock and 10% bond porfolio. When stock prices fall, they are cheap and that is the best time to buy them. Buying stocks cheap leads to the highest possible returns.

Would you wait until a pair of shoes has gone off sale to then buy them? No, you would buy them while they are on sale. Why are stocks any different?

When current prices are high, future returns will be low. When current prices are low, future returns will be high. This is as steadfast as the law of gravity.

"A young person should get down on his knees and pray for a stock market crash, so that he can purchase his retirement shares at firesale prices." - William Bernstein

"The ability to ignore current market conditions is one of an investor's greatest weapons." - William Bernstein

"The fact that stock prices have fallen only makes them safer, not riskier." - Benjamin Graham

Now, if your goal is only a few years away and you need to preserve your capital, then you should not have most of your money in stocks anyway. You should be heavy into bonds.

Check out my free book http://www.invest-for-retirement.com for more info.

Answer 4

I would suggest looking into a diversified porfolio of ETFs.... Here are some that are worth taking a look at in a bear market.

SRS (Ultra Short Real Estate)
SKS (Ultra Short Financials)
FXF (Swiss Franc ETF, mostly backed by gold)
DBA (food commodity ETF, everyone needs to eat!)
TWM (Ultra Short Russel 2k Index)
GLD (Gold ETF inflation hedge)
EWZ (Brazilian Market ETF)

Other various foriegn etfs are worth looking into to diversify the risk

Answer 5

Try your local Library ....

Generally to avoid loosing your shirt in a Bear market :-

Short (sell, or Spread bet against) shares that are currently 'over hyped' and riding for a fall - i.e. those that are sensitive to Consumer spending (eg. retailers, except food) and higher interest rates (i.e. those with high borrowings (gearing over 100%) and currently high p/e's (over 20) and zero (or little) dividends = i.e. what are currently regarded as 'growth' stocks).

Buy shares in large companies (FTSE250) that are 'relatively' immune to Consumer spending downturn and high interest rates eg. non-specialist Food retaliers & Utilities without high borrowings (gearing under 50%) = you can't do without Food, Water, Gas, Electricity = focus on those that are 'cheap' (p/e under 15) and continue to pay decent dividends (5% +).

Watch prices of major Companies drop. After they are down about 15 to 20% over about 6-12 months you can start buying 'quality' stocks gradually. As they continue to drop (typicaly for another 6 - 12 months) you continue to buy.

Be wary of Banks - they pay decent dividends and have low p/e's BUT they are vulnerable to "bad debt" ... avoid those who have high US exposure, especially in the 'sub-prime' lending market ... they COULD go 'bust'

Finally = ride it out .. if you hold major company stocks they WILL recover ... just collect the dividends and hang on for 5 years.

Too many investors panic after 12 - 18 months of slipping prices and sell out (NO NO NO = that's the time to BUY) ... only to see their stocks gradually recover over the next 3 years and realise that they sold at the bottom ... a classic example is M&S ..

Answer 6

Hi, i recommand you a good and basic tutorial for investing. it covers all Issues related to your Investing and everything around it.

http://www.tutorialforyou.net/investing/

wish it will help you.

Good Luck , Best Wishes!

Answer 7

Buy etf's that are short.

Answer 8

www.moneyweek.com